Innovation and Organization Advancement
Steven C. Wheelwright
BYU – Hawaii
Convocation – September 6, 2007
Aloha! My dear brothers and sisters, thank you for coming today. I am grateful
for the opportunity to address you in this special convocation. I have always loved
learning, and appreciate the opportunity that Dean Burroughs and others have provided
for me to share some of the results of my own research and that of several close
colleagues.
It is clear from the Lord’s many revelations to the prophet Joseph Smith, that
learning and furthering one’s education, especially when combined with obedience to
God, is not just desirable, but a Devine commandment. (See D&C 88:118-119 and
109:7.) Furthermore, the benefit of such learning accrues to us not only in this life, but
continues into the eternities. (See D&C 130:18-19.)
To the benefit and blessing of all of His children, the Lord has made clear that in
the last days, the dispensation of the fullness of times, all things will be revealed. (See
D&C 101:23-24.) Let me refer to one of the sections of the Doctrine and Covenants
where the Lord made abundantly clear to the Prophet Joseph Smith, the magnitude of all
that was soon to be revealed. The wonderful and instructive Section 121 of the Doctrine
and Covenants contains the following:
“God shall give unto you knowledge by His Holy Spirit…that has not been
revealed since the world was until now.” (D&C 121:26)
The Lord went on to say that it would be,
“A time…in the which nothing shall be withheld…All thrones and
dominions, principalities and powers, shall be revealed…And also, if there be
bounds set to the heavens or to the seas, or to the dry land, or to the sun,
moon, or stars – All the times of their revolutions, all the appointed days,
months and years,…and all their glories, laws, and set times, shall be
revealed in the days of the dispensation of the fullness of times.” (D&C
121:28-31)
While we might be tempted to think of “all things in Christ” (see Ephesians 1:10)
as referring only to spiritual matters, we know that with God all things are spiritual. He
knows and understands all the concepts, laws and principles that govern this universe.
He is Omniscient and he can and will instruct us “more perfectly in theory, in principle,
in doctrine, in the law of the gospel, in all things…that are expedient for [us] to
understand.” (See D&C 88:78-79.)
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History confirms for us that indeed during the period from the 1400’s to the start
of the 1800’s, not only were the necessary conditions established for the restoration of the
gospel, but a foundation of basic understanding relating to the physical, mathematical and
other sciences was also put in place, so that the dispensation of the fullness of times could
begin with the calling of the prophet Joseph Smith. The record of the past 200 years
testifies that the Lord is true in fulfilling His promises.
Since that day in a grove of trees in upstate New York, there has been a veritable
explosion of secular knowledge and its application for the betterment of mankind.
Starting with railroads and steamships, it has progressed to factories, the telegraph, and
then to cars, telephones, airplanes, computers and even rockets. And more recently, the
developments of the internet, of medical science and of a myriad of consumer products
have further blessed our lives and facilitated the continued spread of the gospel to every
nation, kindred, tongue and people. (See “Nothing Shall be Withheld,” Merrill J.
Bateman, BYUI Devotional, May 2007.)
I am grateful to a loving Father and His Son, for the blessing it is to live in the
fullness of times. As I reflect on all the Lord has revealed and will yet reveal, I’m deeply
humbled as I consider the efforts and results that myself and several close colleagues
have been able to make it one small corner of this world of innovation and discovery.
Since there are many approaches to the study of innovation and discovery, let me
begin by describing and illustrating three of the most common. The first is what might be
termed the brilliant innovator or entrepreneur model. It recognizes that there are a
number of individuals who are extremely creative and who seem to have an unending
stream of new ideas. And when supported by an appropriate organization, they can
spawn whole new product families and fields of endeavors. One example of such a
person would be Thomas Edison and his vast array of electrical products which
eventually formed the basis for the General Electric Company. Another would be Edwin
Land, the inventor of the instant camera and founder of the Polaroid Company. In
addition, many serial entrepreneurs have followed a version of this model.
The second approach is what might be termed the creative culture organizational
model. Throughout an organization following this model, innovation and creativity are
encouraged and rewarded in order to deliver an ongoing stream of new product lines and
services that can be launched successfully. A well known organization of this type would
be 3M with such break through product lines as scotch tape, post-its, sand paper, and
many other industrial goods. Other examples would include Nabisco and Frito-Lay in
food products, or more recently, Google with its many initiatives and emerging product
lines in information services.
A third approach to innovation is that involving a systematic, ongoing stream of
product generations in just a few product families. Under this approach an organization
seeks to develop expertise in a set of related technologies, and then over time, continually
deepens their understanding of those technologies and integrates them into products that
serve large on-going markets. Such firms regularly apply advances in technology to an
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ever improving stream of products such as Intel in semiconductors, Toyota in
automobiles, IBM in computers, Johnson and Johnson in scientific instruments, and Pixar
Studios in animated movies. Each of these organizations has built a reputation for
ongoing innovation across generations of products within a well known family.
Over the past 25 years my academic efforts along with those of several
colleagues, have focused on this third approach. (See attached Bibleography.) We have
sought to study how companies which purport to have as their goal, the development of
new and improved products that benefit the world, pursue that ambition. In particular,
we have tried to discover what makes some organizations far more successful at this
endeavor than many of their counterparts.
In order to make our studies relevant to practice and credible to those involved in
such activities, we began by identifying a handful of industries where innovation and
competition were rapid and unrelenting. We wanted industries where in a relatively short
span of time a new product could be developed, introduced and then evaluated by the
marketplace. Among the industries we chose were automobiles, computers and medical
devices. Each of these focuses much of their activity on developing new technologically
sophisticated products that will hopefully propel their organization to greater success in
the market place.
Since many of the details of such innovation and new product development are
not ones you may be familiar with, it might be helpful if I describe my research as falling
into three phases. The first consisted of a diagnostic phase to understand the nature of the
problems and challenges organizations face in such development efforts. The second
consisted of developing concepts and terminology that would facilitate data gathering and
the making of comparisons across development projects in different companies and
industries. And the third phase consisted of analyzing those data to draw conclusions and
insights that could be applied broadly by others. Let me briefly describe the results of the
initial two phases and then focus on the third.
In the first phase of our work we studied in detail several dozen major new
product development projects – from the Toyota Lexus to the Honda Acura, from the
Apple Mac to the IBM laptop, and from a Johnson and Johnson stent to an implantable
Guidant defibrillator. One of the things we quickly learned was that they all were
organized into individual development projects with a project plan consisting of
milestones, project phases and a timeline.
We also learned that all such product development projects typically had a set of
three goals – a budget, a launch date, and a set of market performance specifications.
And we learned that every group working on a project always started with very high
hopes – their new product was going to perform better, cost less and be more timely in
the market place than so many projects that had gone before. They knew their new
product could correct past deficiencies and shortcomings, not only to benefit their
company, but to the benefit of their personal reputations and careers.
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Unfortunately, we soon discovered that most new product development projects
fell far short of their promise. As individual tasks proved unusually challenging and
failed to be completed on time, project time lines slipped and budgets soared. Then,
because management had already made commitments to customers, suppliers and
stockholders, such shortcomings were followed by additional pressure, which often
served to add more costs and create further delays. The end result was that a project
originally intended to take 12 months might instead take 20 months. And with such
delays, there came added costs and a failure to match the competitive products already in
the market.
Government projects also often fall prey to these same challenges. During the
past 16 years in downtown Boston there has been a project going on that is known as the
“big dig”. It is designed to put two major highways underground and add a third tunnel
to the airport, and then to turn the above ground area into parks and open space.
Originally approved as a 5 to 7 year project costing $4 billion, it has now been 16 years at
a cost of $15 billion and the above ground portion is still not completed.
Following the initial diagnostic phase of our research, in phase two we sought to
develop a basis for comparing new product development projects across companies and
industries. To this end we sought to identify, define and apply a set of concepts and
terms that could be used in gathering data and comparing a variety of projects and their
results.
Three concepts with their related definitions proved extremely useful in this
second phase. One was the concept of a product generation and the related concept of a
product family. Often product families and their generations can be identified easily by
their product names. For example, in the software industry, Windows is a product family
within which there have been several product generations – Windows 97, Windows 2000,
Windows 2003, and most recently Windows 2007.
Another example of product generations and product families would be the
German automaker, BMW, which has traditionally had three product families - the Series
3, the Series 5 and the Series 7. Within each family there are multiple models, but those
tend to vary only in minor ways from a design and manufacturing point of view. For a
product family like the series 3, for almost five decades, every five to eight years BMW
has done a total redesign of the product family to incorporate new technology and new
features and to adapt to emerging customer preferences. Each such redesign constitutes
the next generation of that family of vehicles.
Such product families with their sequential generations, add structure and clarity
to product development efforts. Such a pattern allows a company to leverage new
technology and features across a sizeable volume of products, while offering different
product models within the family in order to increase appeal to market sub segments.
A second concept we found useful to define in this phase of our work was that of
a platform project. While the company’s development goal is not simply a single
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product, but rather a family of products, from our work we discovered that it is very
helpful to initially design the major platform product – that is the heart of the new
product line – and then to quickly design additional derivative products based on that
platform design.
In each such case, the most efficient way to design and develop the next
generation of products was to define and develop the platform product, with its
accompanying specifications, and then to quickly turn that platform into several
derivative models. A key implication of the concept of the platform product is captured
by the old adage, “you can’t make a silk purse out of a sow’s ear.” Similarly, in product
development, if your platform project isn’t right –on budget, on time and on target for the
market – no amount of tweaking or adjusting is going to make it significantly better.
Because of the leverage of the platform product in a new generation, my colleagues and I
have chosen to focus our research primarily on platform product development efforts.
One final concept we found useful to define and develop was that of team type.
Since all product development projects involve the integration of many different
disciplines, functions and skills, they invariably require the involvement of a team of
diverse people drawn from throughout the organization, its key suppliers and its
customers. Initially in our product development research, we discovered that there were
two dominant ways to organize these teams. That is, there were two primary team types
– the functional team and the autonomous team. Let me illustrate these two graphically:
Overhead (Functional Teams versus Autonomous Teams)
In the functional team, people in each of the functions are designated as being on
the team, but their desk or workbench remains in their functional area, and after each
team meeting, they return to that area to do their work on the project. Their focus
remains primarily rooted in their function and its activities. In the autonomous team, the
team members are taken out of their functional areas and put together in their own work
space. As you might expect, they quickly begin to identify with each other, their project
and its goals.
Because of the many advantages and disadvantage of each of these two types of
teams, we also discovered that some companies were defining and using two other types
of teams, each of which tried to take advantage of the strengths of one of the dominant
types, while reducing its disadvantages. These are what we came to call light weight and
heavy weight teams, a reflection of how the team members felt about their team role.
Overhead (Lightweight Teams versus Heavyweight Teams)
As shown in this graphic, the lightweight team maintained the dominant
functional organization, but sought to overlay it with more coordination. But members of
such a team invariably thought of themselves as light weight because they knew that they
did not control the majority of the resources needed for the project, nor could they make
any decisions without the approval of the individual functions.
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The heavyweight team on the other hand was co-located, and was given control
over roughly two thirds of the resources needed for the project. Furthermore, they were
sufficiently senior that they could make many decisions without detailed functional
reviews, and they had the clout to effectively negotiate with the functions when
challenging issues arose. But they also operated in a manner consistent with the
processes of the existing organization and did not try to become truly autonomous.
Let me now turn to the third phase of our research and highlight a few of the
conclusions from this body of work and their implications. Perhaps one of the most
compelling findings early on, was the power of selecting the right type of team for a
platform development project. While we had already done work to understand the
differences between the types of development teams, working with a doctoral student,
Taka Fujimoto, my colleague Professor Kim Clark gathered data on over 30 platform
development projects coming from the leading automotive companies in the world. Their
results, published in the early 90’s, brought to light some dramatic differences in
performance. (See Clark, Kim B. and Fujimoto, Takahiro (1991). Product Development
Performance. Boston: HBS Press.)
Overhead (Auto Industry Results by Team Type)
Let me explain the three metrics used in this comparison. Time represents the
length of the project timeline from the start of a fully resourced project to the launch of
the new product in the market place. Resources represent the number of technical and
engineering hours in millions applied to that project. And quality represents the
evaluations given by customers in response to the surveys that J.D. Powers does of all
new car buyers in the U.S., Europe and Japan.
As shown in this summary chart, those development teams who organized around
an integrated heavyweight team model completed their next generation platform projects
in two thirds the time and one half the resources as those using a lightweight functional
organization. In addition, the resulting quality of the products developed by these
heavyweight teams, as rated by customers, was 50% higher than that experienced by
buyers of new car platforms developed by lightweight functional teams.
This explains much about the competitive changes we’ve seen in the global auto
industry over the past 20 years. The fastest growing, most profitable auto company
throughout this period has been Toyota. And throughout, they have used heavyweight
teams on all their next generation product development efforts. Today, they can develop
such a new car platform in as short as two years, using even fewer resources and with the
same high quality. No wonder they are now the number two auto maker in the world and
before long will be number one. When Toyota entered the auto industry in the late fifties,
few would have thought that possible.
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Let me give you a second example from the world of computers and electronics.
Back in the early 1980’s, I started doing product development research on a young
upstart company named Apple. The first platform project we studied was the LISA
computer with its derivative product, the Macintosh. This project was the first platform
for a new product family and for all intents and purposes, the team leader of this project
was the then CEO, Steve Jobs. The team structure was that of an autonomous team and
while it launched Apple on a whole new trajectory, they still had much to learn.
By the early nineties many were predicting the demise and disappearance of
Apple as a computer company. Finally, Steve Jobs was brought back, having learned
much about heavyweight teams and many of the other tools related to successful
innovation and product development. As a result, the Apple we know today has nine
major product families – three under the iPod name (the shuffle, the nano and the iPod),
five under the Mac name (MacBook, MacBook Pro, Mac mini, iMac and MacPro) and
one under the recently added iPhone name.
While many lessons can be drawn from the results achieved by firms like Toyota
and Apple, as well as from the research that my colleagues and I have worked on for
these past few decades, let me just summarize three of those:
1- Defining and structuring product families and their generations, and
appropriately defining the platform for each subsequent generation can
have a dramatic and sustained impact on the successful application of
new technology and the creation of a continuing stream of innovative new
products.
2- Developing the organizational capability and processes to form and lead
integrated heavyweight teams on platform development projects can turn
the promise of new product generations into customer pleasing products
and services.
3- Sustaining and enhancing such new product development capabilities
over an extended period of time can transform an industry and greatly
enhance the customer appeal of such products.
I hope it is clear to all of you that I love the areas of new product development
and innovation that I’ve been blessed to be a part of. And I have enjoyed working with
many wonderful colleagues on these endeavors. My years of research and systematic
study have been filled with exciting and engaging discoveries and the opportunity to see
those adopted and built upon by many others.
Not surprisingly, I have come to see many of the challenges of higher education,
through the lens of innovation and product development. So let me, if I might, spend the
last few minutes on some of the challenges we face and how the findings and lessons of
innovation and product development might shed light on those. These are not
conclusions, but rather “food for thought”.
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The first of these challenges follows directly from the ever expanding knowledge
base in all the fields and disciplines with which we are concerned. Much of this is the
result of the inspired and inspiring efforts of the researchers located within Universities
around the globe. Almost daily we hear of the discovery and refinement of new and
exciting knowledge which deepens our understanding of the physical and social sciences
and expands the horizons of artistic endeavor. But with this progress comes greater and
greater specialization within the disciplines and the challenge of keeping up to date both
individually and collectively.
A second challenge is that of the marketplace for our graduates – the
organizations and businesses whose very existence depends on hiring graduates who are
prepared to participate in practice, who can add to the effectiveness of their organization
from day one, and who can continue to build on a solid educational foundation through
constant, ongoing learning. I believe that this is one of the reasons that those involved in
the accreditation of institutions such as ours are so focused on outcomes and their
assessment. Like the market for our students, they want to know what we are trying to
accomplish and how well we are doing it.
While these two challenges have major implications for departments and their
faculties, they also have major implications for both general education courses as well as
for upper division work in a major. Part of the challenge arises because the dominant
organization in Universities is functional, and yet the market wants graduates who can
bring integrated knowledge to bear on a diverse set of conditions and provide solutions to
complex problems. The core strength of the university – deep functional expertise in
multiple disciplines – appears to work against the integration that potential employers
seek.
To further complement these efforts to provide breadth and relevance to practice,
increasingly undergraduates are encouraged to pursue an internship and to find oncampus employment opportunities – whether in a science lab, a media studio, or an audit
group – where they can apply what is being learned in class and further focus and
develop their capabilities. Indeed few potential employers are interested in graduates
who fail to understand the practical application of the things they have studied and lack
the basic tools needed to contribute to ongoing organizational tasks and real time problem
solving. While our internship efforts and our on-campus and PCC job opportunities are
helping in this regard, I think we all understand that much more needs to be done.
And let me just mention a third challenge that undergraduate programs are
wrestling with, and that is the question of pedagogy and how to make teaching and
learning more engaging and relevant to students. Through a variety of new technologies
and innovations, the world is discovering new ways of communicating, learning and
working together. Fast disappearing is the day of the traditional education model of a
learned professor lecturing to a class with the dominant information flow being one way.
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These are just a few of the challenges that undergraduate institutions, like BYUHawaii face – but we have the distinct advantage and blessing of being in an environment
where we can not only rely on the capable professional work going on around us, but we
can literally call on the powers of Heaven for help. As Elder Neal A. Maxwell has stated,
"Only an excellent university can really help the Church much. Mediocrity
won't do, either academically or spiritually. A unique church deserves a
unique university!" (Neal A. Maxwell, "Out of the Best Faculty," BYU Annual
Conference. August 1993.)
I do not have the answers to these three areas of challenge that I’ve just outlined.
And while I do believe that much of what has been learned in recent decades regarding
innovation and the development of new products and services may be useful, I also
believe that through the power of the Holy Ghost, the Lord will inspire us and direct us so
that we can achieve the mission and prophetic promises made concerning this great
University. We can be both excellent and distinctive in doing this work. In fact, given
our scale and resources, I firmly believe the only way we can accomplish this is by
integrating the best of secular learning with the best of Spiritual learning and insight.
As we live and learn with increased faith and obedience, great blessings will be
ours both individually and collectively. I know the Lord loves us. We are His children,
heirs to all that he has – including all knowledge, all power, and all wisdom. I so testify
in the name of the creator of this world and all that is in it, even Jesus Christ, Amen.
Selected Bibliography – Collaborative Colleagues Working on New Product Development
Burgelman, R.A., Christensen, C.M., and Wheelwright, S.C. (2004). Strategic
Management of Technology and Innovation, 4th Edition. New York: McGrawHill Irwin. (5th Edition, Expected January 2008)
Baldwin, C.Y., and Clark, K.B. (2000), Design Rules -The Power of Modularity.
Cambridge, Ma: MIT Press.
Christensen, Clayton M. (1997) The Innovator’s Dilemma. Boston, MA: Harvard
Business School Press.
Pisano, G.P., and Wheelwright, S.C. (1995, Sept-Oct). “The New Logic of HighTech R&D.” Harvard Business Review.
Clark, K.B., and Wheelwright, S.C. (1995). They Got It Right! Boston: Harvard
Business School Publishing-Management Productions. (video-based product)
Clark, K.B., and Wheelwright, S.C. (Eds.) (1995). The Product Development
Challenge: Competing through Speed, Quality, and Creativity. Boston: HBS
Press.
Wheelwright, S.C., and Clark, K.B. (1995). Leading Product Development. New
York: Free Press.
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Bowen, H.K., Clark, K.B., Holloway, C., and Wheelwright, S.C. (Eds.) (1994).
The Manufacturer's Perpetual Enterprise Machine. New York: Oxford
University Press.
Clark, K.B., and Wheelwright, S.C. (1993). Managing New Product and Process
Development: Text and Cases. New York: Free Press.
Wheelwright, S.C., and Clark, K.B. (1992). Revolutionizing Product
Development. New York: Free Press.
Clark, K.B., and Wheelwright, S.C. (1992, Summer). "Organizing and Leading
'Heavyweight' Development Teams." California Management Review.
Wheelwright, S.C., and Clark, K.B. (1992, March-April). "Creating Project Plans
to Focus Product Development." Harvard Business Review.
Clark, Kim B. and Fujimoto, Takahiro (1991). Product Development
Performance. Boston: HBS Press.
Wheelwright, S.C., and Sasser, W.E. (1989, May-June). "The New Product
Development Map." Harvard Business Review.
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